Page:United States Statutes at Large Volume 94 Part 2.djvu/1388

 94 STAT. 2666

PUBLIC LAW 96-499—DEC. 5, 1980 "(ii) an expected maturity for the bonds which is consistent with the assumption required under subparagraph (B)(iv). "(3) NON-MORTGAGE INVESTMENT REQUIREMENTS.—

"(A) IN GENERAL.—An issue meets the requirements of this paragraph only if— "(i) at no time during any bond year may the amount invested in non-mortgage investments with a yield higher than the yield on the issue exceed 150 percent of the debt service on the issue for the bond year, and "(ii) the aggregate amount invested as provided in clause (i) is promptly and appropriately reduced as mortgages are repaid. "(B) EXCEPTION FOR TEMPORARY PERIODS.—Subparagraph

(A) shall not apply to— "(i) proceeds of the issue invested for an initial temporary period until such proceeds are needed for mortgages, and (ii) temporary investment periods related to debt service. "(C) DEBT SERVICE DEFINED.—For purposes of subpara-

graph (A), the debt service on the issue for any bond year is the scheduled amount of interest and amortization of principal payable for such year with respect to such issue. For purposes of the preceding sentence, there shall not be taken into account amounts scheduled with respect to any bond which has been retired before the beginning of the bond year. "(4) ARBITRAGE AND INVESTMENT GAINS TO BE USED TO REDUCE COSTS OF O W N E R - F I N A N C I N G. —

"(A) IN GENERAL.—An issue shall be treated as meeting the requirements of this paragraph only if an amount equal to the sum of— "(i) the excess of— "(I) the amount earned on all non-mortgage investments (other than investments attributable to an excess described in this clause), over "(II) the amount which would have been earned if the investments were invested at a rate equal to the yield on the issue, plus "(ii) any income attributable to the excess described in clause (i), shall be paid or credited to the mortgagors as rapidly as may be practicable. (B) INVESTMENT GAINS AND LOSSES.—For purposes of subparagraph (A), in determining the amount earned on all nonmortgage investments, any gain or loss on the disposition of such investments shall be taken into account, "(j) OTHER REQUIREMENTS.— "(1) OBLIGATIONS MUST BE REGISTERED.—An issue meets the

requirements of this subsection only if each obligation issued pursuant to such issue is in registered form. "(2) MORTGAGES MUST BE NEW MORTGAGES.—

"(A) IN GENERAL.—An issue meets the requirements of this subsection only if no part of the proceeds of such issue is to be used to acquire or replace existing mortgages. "(B) EXCEPTIONS.—Under regulations prescribed by the Secretary, the replacement of—

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